The Philippine economy likely grew 5.8 percent in the third quarter, faster than the 5.6-percent expansion in the second quarter, as government spending picked up, Moody’s Analytics, a division of Moody’s Corp., said in a report Friday.
“The Philippines likely grew 5.8 percent year-on-year in the September quarter, up from 5.6 percent in the June quarter. Higher government spending was likely the main driver and provided a further boost to investment over the quarter,” Moody’s said.
“The government stepped up stimulus after weakness earlier in the year threatened the Philippines record of impressive GDP [gross domestic product] growth in recent years,” it said.
The government will release the official GDP growth figures on Nov. 26.
The first-quarter growth of 5 percent was dragged down by the government’s anemic fiscal expenditures, which actually began in the third quarter of 2014.
The government became cautious to spend after the Supreme Court earlier ruled the administration’s Disbursement Acceleration Program as unconstitutional. The high tribunal,
however, reversed the ruling later.
The government vowed to accelerate fiscal spending at the start of the second quarter. Second-quarter GDP grew 5.6 percent, a rebound from the sluggish 5 percent a quarter ago, but was still slower than the 6.4-percent expansion in the same quarter of 2014.
This brought the first-half growth to 5.3 percent, below the government’s target range of 7 percent to 8 percent for the year.
Moody’s said despite the rosy outlook in the third quarter, exports remained a “weak point” due to sluggish global demand, especially from China. The world’s second-largest economy is an important trading partner of the Philippines.
Data from the Philippine Statistics Authority showed that exports fell 24.7 percent in September, as soft global demand and depressed prices weakened the shipments of all key commodities.
The PSA said total revenue from Philippine exports fell to $4.4 billion in September 2015 from $5.8 billion recorded in the same period last year.
This was the largest decline in export revenues since September 2011 when the supply-chain disruption in key Asian countries caused a sharp decline in demand for electronics.
Earlier this month, British bank Hongkong and Shanghai Banking Corp. said the Philippines would continue to outperform some of its peers in the region even if economic growth settled at the 5-percent level this year.
“The fundamentals of the economy remain strong… Even if the economy grows at 5 percent, it will remain one of the bright spots in the Asian region,” Joseph Incalcaterra, HSBC Asia-Pacific economist, said in a briefing.
Incalcaterra said the Philippine economy might expand by 5.5 percent this year.
HSBC said the growth prospects of the Philippines remained bright due to its indirect exposure to the Chinese economic slowdown and lower commodity prices.
HSBC cited the Philippines along with Japan as two of the countries that could be less vulnerable to external shocks.
It said the Philippines’ outlook could be better than its neighboring countries in the region, such as Malaysia and Indonesia. It said commodity price weakness hurt both these countries whose foreign exchange reserves were being depleted.
Last year, the Philippine economy grew by 6.1 percent, one of the fastest in the Asian region.